The effects of a scattering medium on the performance of time-delay estimation are considered. The medium is assumed to exhibit angular scattering, causing angular (as well as delay) dispersion and hence loss of signal coherence across the array aperture. Both the variance (via the Cramer-Rao bound) and the bias introduced in the time-delay estimates are studied. The results have been converted to bearing and range error standard deviation and bias. It is shown that there is an optimum range of values for the separation distance between the sensors in the design of an array for time-delay estimation, for range and bearing measurements.